Since the start of Q4FY21, crude oil prices have gone up by ~35%, which percolated to many chemicals prices to reach considerably higher levels.

Since there has been a lag impact of passing on higher input cost to end users, we expect our universe companies to have able to pass on meaningful increase during this quarter and thereby assist sustainability/improvement in gross margins. In terms of volume growth, since there has been restoration of demand across construction, auto, textile along with sectors being resistant during pandemic such as pharma, agrochemical, FMCG, it should likely have supported volume growth for most chemical companies during last quarter.

We expect double digit volume growth for most companies under our universe. We expect majority of our coverage companies to report inventory gains on the back of higher end product prices, which should support better gross margins this quarter.

Further, operating leverage can likely aid OPM for the quarter. In a nutshell, we expect our chemical universe to register topline growth of 26.1% YoY while bottomline is expected to grow 67.1% YoY in last quarter.